SPECIAL FOCUS

Scoping Study: The Use of Technology in Microinsurance

The CGAP Working Group on Microinsurance and the Microinsurance Innovation Facility are compiling an inventory of information technologies that are or could be applicable in the extension of insurance services to low-income households...

Survey Objectives

The objectives of the study are to catalogue and illustrate all kinds of technologies used or potentially useable in the area of microinsurance. The areas of the study include data collection, communications, management information systems and services to support microinsurance practitioners and to support capacity building groups working with these organisations. Everyone participating in the survey is making a material contribution to advancing the common understanding of technology and microinsurance.

Three different questionnaires are available:

1. User Profile Questionnaire

This questionnaire records contact details and is targeted at people who have a general interested in the subject of the application of technology to microinsurance.

2. Field Experience Questionnaire

This questionnaire is aimed at microinsurance providers and practitioners and assesses the level of information technology used by them in the field.

3. Systems and Requirements Questionnaire

This questionnaire is primarily for product and service suppliers to describe their offerings. The main objective is to report on the different types of technology currently available on the market.

Note: This questionnaire can also be used by people who wish to describe the functionality of the systems they would like to have.

To complete a questionnaire, go to Stocktaking on MI Technologies

A real time summary of the survey statistics can also be viewed.

The outputs of the study will be

- To understand the microinsurance business processes, for example how technology might contribute to efficiencies, or control costs and risks, or improve management in enrolment, underwriting, premium payments, renewals, claims applications, verification and payments, considering the requirements at both the front and back office.

- What processing are required in microinsurance, and what information are needed at different levels, including delivery channels, risk carriers, health care providers, third-party administrators, insurance supervisors and industry associations.

- How to choose the right type of technology: software (stand-alone, web-based, proprietary, open-source, user-friendliness etc.), hardware (e.g. computers, handheld devices, mobile phones, bar code, smart cards etc.)

- The phase of development: e.g. Implemented, could be implemented in the short and medium term, requires substantial development etc. and the use the taxonomy to catalogue technologies (ideally in a soft table to be proposed online) and highlight the chain of technologies used in the microinsurance processes from the software back end to the front-end devices via the network/channel used.

* Technology Sub-group

Previous Special Focus

Call for Proposals for Microinsurance Conference 2008

The Fourth International Microinsurance Conference will take place from 5-7 November 2008 in Cartagena, Colombia. Participants are invited to submit a proposal for the four key topics: technology; capacity building; regulation, supervision and policy issues; and innovate products and distribution channels

The Conference will be based on four key themes:

TECHNOLOGY

In order to make microinsurance viable, improving technological skills (e.g. portable devices, smart cards, etc.) could maximize the efficiency of the sector. Organisations or technology providers willing to share ideas or experiences should include them in the presentation.

CAPACITY BUILDING

Improving the capacity of persons and institutions, is now crucial; notably within the financial literacy of the target market and the expertise of the delivery channels, as well as the need of better understanding of the poor’s primarily needs. Organisations with successful capacity building experiences are invited to present their methods, tools and strategies at the conference.

REGULATION, SUPERVISION AND POLICY ISSUES

Microinsurance as an emerging market is starting to familiarize with a policy and regulatory environment which originally was not designed to accommodate it. Examples of successful microinsurance services for low-income households are welcome during the conference; for instance, the use of smart subsidies, public-private partnerships, effective consumer protections schemes, and regulatory adaptations to promote quality insurance for the poor.

INNOVATIVE PRODUCTS AND DISTRIBUTION CHANNELS

In order to enhance access to Microinsurance in an all inclusive way, Microfinance institutions need to create new effective distribution channels. At the same time, reducing costs, providing good value by covering various risks the poor face, remains a challenge. Suggestions about innovative and effective microinsurance products and distribution channels that enable more low-income people to manage the risks of death, illness, and natural disasters would be appreciated.

The purpose of the conference is to bring up professional experiences in microinsurance and go beyond pure academic research. This event aims to interact with different kind of experts from different fields and backgrounds. In this sense, all session proposals will be reviewed by the conference steering committee and preference will be given to session proposals that reflect this philosophy.

Please e-mail proposals to info@munichre-foundation.org

More information: www.microinsuranceconference2008.org

Microinsurance Innovation Facility: Innovation Grant Application Announced

The Microinsurance Innovation Facility, a partnership between the International Labour Organization (ILO) and the Bill & Melinda Gates Foundation, will help promote decent work for millions of low-income people in developing countries.

To support the emergence of valuable insurance coverage to protect the working poor, over the next five years (2008 to 2012) the Facility will engage in four sets of activities, the first being innovation grants to stimulate new ideas and test new approaches to providing better products to un- and under- served markets

What is innovation?

Innovation may involve borrowing ideas from other domains or regions to do something new at home. Innovation may be incremental, creating a small improvement at the margins; or it may be radical, a riskier effort with a higher potential return.

Of course, the intention is not to support innovation for innovation’s sake. Innovation must be designed to achieve something beneficial. In sum, innovation involves taking risks, venturing into uncharted territory in the hope of creating something better.

The Microinsurance Innovation Facility’s primary objective is to learn: to learn how to provide better insurance coverage to more low-income people, to learn how to develop an insurance culture among the poor, and to understand the extent to which the working poor can benefit from insurance as a risk management tool.

To achieve this learning objective, the Facility will support activities that challenge the conventional wisdom. The innovation grants are therefore seen as action research, dynamic efforts to introduce new products, processes or models, or improve on existing ones, or take successful products/models to new markets. Such initiatives could be done on an experimental basis—for example, undertaken with some clients, but not with others—to assess their effectiveness or impact.

Who is eligible for an innovation grant?

Organizations eligible for grants include:

• Risk carriers such as insurance companies, semi-formal microinsurers, or federations of microinsurance schemes

• Delivery channels including NGOs, cooperatives, banks and microfinance institutions, labour unions and employers’ associations, insurance brokers and agents, and other distribution channels

• Suppliers to the insurance industry such as third-party administrators or claims processing centres, providers of software and database management services, training centres or industry associations

It is possible—even encouraged—for two or more eligible organizations to apply for a grant together. To meet the challenges associated with institutional models (the second theme discussed above), the Facility is especially interested in supporting collaborations between different types of entities.

The Facility wants to work with strong organizations that have internal control systems and the capacity to produce financial statements. Organizations or consortia with a track record of success are welcome to propose ambitious projects that will enable them to significantly increase their outreach, while organizations that are relatively new to microinsurance are encouraged to consider pilot activities.

We are looking for a diverse portfolio of grantees across the developing world, with a focus on Africa, Asia, Latin America and the Middle East. Although these grants could support insurance for any type of risk, priority will be given to voluntary products for which there is a significant demand yet insufficient supply, including health, agriculture, property, and accumulating value life or disability products.

Application forms and directives are available on www.ilo.org/socialfinance

The Need for Microinsurance in France

This Special Focus presents the microinsurance programme of Entrepreneurs de la Cité in France. Entrepreneurs de la Cité is an association that aims to support micro-entreprise start-ups by poor people by offering a micro-insurance scheme that meets their needs.

Poverty is not a phenomenon exclusively associated with developing countries. In 2005, 12.1% of the population in France lived below the poverty line , with the majority of people aged from 18 to 25 years. In Europe, people who are defined as poor are not in total destitution, but they live below the national standards and have difficulties sustaining themselves and their families.

In February 2007, the unemployment rate in France was 8.8% and according to the INSEE, the French Institute for Economic Studies and Statistics, 86.5% of new companies are created by micro-entrepreneurs. In 2006, approximately 113,000 of these businesses were created by the unemployed.

Regulations are strict and most of those who set up a micro-entreprise must form a formal company. This entails a heavy burden of social contributions that can hinder entrepreneurial initiatives and even prevent start-up entrepreneurs, due to a lack of means, like, for example, acquiring the necessary insurance coverage that also would help them protect their project and avoid the economic pitfall resulting from a potential accident.

On the other hand, traditional insurance packages are not adapted to the needs of these new entrepreneurs. These offers are often beyond their reach because of their cost, or because of their inadapted coverage. This situation currently excludes some tens of thousands of people from the insurance market.

The idea to create the association Entrepreneurs de la Cité was based on this situation and their microinsurance scheme is the first one in Europe to be fully operational.

Entrepreneurs de la Cité includes two associative structures : One that is aimed at product development and covers the microinsurance management fees thanks to private and public subsidies. This way management fees are not transferred onto the insurance holder. The other structure, the Association des Assurés, aims at contracting and managing grouped insurance plans with insurance companies while acting as an intermediary between the companies and the members (the insured).

The Association des Assurés distributes and manages the microinsurance scheme and offers assistance to its members throughout the duration of the scheme, in case of sinister, and even upon ending of the scheme. The scheme ends after a period of four years; this is the time when the member may be safely regarded as successful after sustaining his or her enterprise during three years, and ready to enter the traditional insurance market.

In order to develop this microinsurance scheme, Entrepreneurs de la Cité Association (EDLC) carried out studies on micro-entrepreneurs in partnership with company start-up networks, identifying and prioritizing their needs in coverage and budget. Some of the results are that start-up entrepreneurs were looking for insurance, but the price was too high and that the insurance plan offered would not cover their needs.

The product: Trousse Première Assurance

Analysing the needs of start-up entrepreneurs as well as their behaviour of insurance fed into the development of the microinsurance scheme. The “Trousse Première Assurance” is a single, simplified insurance product that can include up to three plans depending on the micro-entrepreneur’s choice: A general plan (e.g. equipment, inventory and premise protection as well as liability coverage), a disability plan and/or a health mutual plan.

If the entrepreneur needs all three guarantees, the Trousse would cost him about 39 Euros per month. This microinsurance programme is about 70% less expensive than a traditional insurance with similar characteristics, not including the non-financial benefits proposed by EDLC.

The risk levels are selected depending on the feasibility of the business project. The feasibility study is made by the partnering experts in enterprise start-up. Then, the subscriber (Entrepreneurs de la Cité) verifies the entrepreneur’s eligibility to the insurance scheme and makes sure the insurance plans are adapted to his or her activities.

As of today, EDLC has 200 insured members. What makes this microinsurance plan different to others is that it is based on the micro-entrepreneurs’ needs and that its price includes no insurer margin and no EDLC (agent) or intermediary fee. In addition, EDLC offers non-financial assistance to its members.

The distribution model can be defined as “partner – advisor – agent” model. The partner (insurance company or health insurance provider) manages the risk and handles the development of the product in partnership with the agent (Entrepreneurs de la Cité) on the basis of the needs primarily identified by the latter. The agent also manages and distributes the scheme that was recommended to the start-up entrepreneur by the advisor (company set-up networks).

The activities are closely monitored by EDLC in order to avoid any loss for the insurers. Insurance companies are involved out of social responsibility and do not make profit out of this microinsurance programme, but they should not have any loss either.

For more information: www.entrepreneursdelacite.org

Author: Paola Romero, Project Coordinator EDLC, January 2008

Microinsurance Conference 2008 confirmed

From 5 to 7 November 2008, the Microinsurance Conference 2008 will take place in Cartagena, Colombia. This event is the fourth international Microinsurance Conference jointly hosted by the CGAP Working Group on Microinsurance and the Munich Re Foundation.

Around 300 experts from around the world will exchange experiences and discuss the challenges of microinsurance. They include representatives from international organisations, NGOs, development-aid agencies, commercial insurance companies and policymakers.

The conference will have plenary panel discussions on key topics addressing an interdisciplinary audience. About twenty parallel working group sessions will deal in depth with different subtopics. Interactive sessions of approximately 90 minutes are the key part of the conference, encouraging the discussion of work in progress and facilitating dialogue in small groups on emerging issues.

The conference will be in English but translation in Spanish will be available for the plenary sessions.

A call for papers will be disseminated in March 2008

Check for updates on the conference website from Munich Re Foundation

An overview of the previous conferences can be found here

• Special Focus Archive 2007
• Special Focus Archive 2006